Article discusses provisions Companies Act, 2013 provisions amended by Companies (Amendment) Act, 2017 related to Start – Ups, Conversion into Company, Directors, Annual General Meeting (AGM) /EGM, Managerial Remuneration, Corporate Social Responsibility (CSR), Auditors, Registered Office, Loan to Directors and Definition of Associate Company.
Key Takeaways of Companies (Amendment) Act, 2017
| 1 |
Start – Ups |
- In case of Incorporation, name reserved by the Registrar of Companies shall be valid for 20 days instead of 60 days from the date of application, as currently provided.
- Now, Sweat Equity shares can be issued at any time after the registration of the Company. Currently, it can be issued after one year from the commencement of business.
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| 2 |
Conversion into Company |
- In case of Change in name by an existing Company, name reserved by the ROC shall be valid for 60 days from the date of approval.
- Partnership or LLP with 2 members (currently 7) can convert into Company.
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| 3 |
Directors |
- Director would be resident director if he stays in India for a total period of not less than 182 days during the financial year. Currently, we calculate the 182 days in reference to the previous Calendar year.
- Central Government can notify either the PAN Card or Aadhar Card as DIN (Director Identification Number).
- Directorship in the dormant Company shall not be included in the limit of directorships of 20 Companies.
- In addition to Directors & Key Managerial Personnel, any employee can also authenticate the documents.
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| 4 |
AGM/EGM |
- Annual General Meeting of Unlisted Company can be held anywhere in India if the consent is given in writing or by electronic mode by all the members.
- Wholly owned Subsidiary of foreign Company can hold EGM outside India.
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| 5 |
Managerial Remuneration |
- No Central Government Approval is required for payment of remuneration in excess of 11% of net profits.
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| 6 |
CSR |
- Eligibility for doing CSR has to be determined based on preceding “Financial Year” instead of “Three Preceding Financial Year”.
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| 7 |
Auditors |
- Now, there is no requirement of annual ratification of appointment of auditors by members at every annual general meeting.
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| 8 |
Registered Office |
- Company shall have Registered Office within 30 days of its Incorporation instead of current of 15 days as currently provided.
- Notice of change of the situation of Registered Office, shall be given to the Registrar within 30 days instead of 15 days, as currently provided.
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| 9 |
Loan to Directors |
- No Company can provide the Loan, guarantee or security in connection with the loan to any director, director of the holding Company or any partner or relative of any such director or any firm in which such director or relative is a partner.
- Now, the Companies are permitted to give loans to following parties after passing the special resolution and adhering to disclosure requirements
(i) Any private company of which such director is a director or a member.
(ii) Anybody corporate in which not less than 25% of the total voting power is exercised or controlled by any such director, or by two or more such directors together at a general meeting. Currently, these transactions are prohibited.
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| 10 |
Definition of Associate Company |
- Change in term ‘significant influence’ in definition of Associate Company.
Currently, it provides for control at least 20% total share capital (Equity + Preference).
But, now Significant Influence means control of at least 20% of the voting power (Equity share capital) or participation in business decision. |
•In addition to Directors & Key Managerial Personnel, any employee can also authenticate the documents.
What does that mean????Elaborate
What kind of documents and how?